Fitch-IAG: China’s domestic tourism hits 119% of pre-COVID-19 levels during Golden Week in May, but international travel capacity remains constrained

During the recent May Day holiday, Chinese consumers traveled domestically at 119% of 2019 levels, buoyed by strong pent-up demand and a slow recovery in international flight capacity, according to ratings agency Fitch.

Fitch analysts said in a research note that the trajectory of the domestic recovery is very encouraging for the tourism sector, which appears to be less affected by uncertainty about employment and income growth than other sectors. They explained that this was due to Chinese consumers’ strong desire to travel after years of travel restrictions.

However, “domestic tourism has also benefited from a slow recovery in outbound flights, which has led many to travel across China,” the agency said. “We do not expect international air traffic to return to pre-pandemic levels until the fourth quarter of 2023 80% of that.”

While the total number of domestic trips was up 19% from 1,019, spending growth was slower at 100.9% of pre-COVID levels, suggesting consumers are spending less per trip than before. Fitch believes this is due to an influx of low-income travelers following years of travel restrictions, more tourists heading to lower-tier cities and rural areas, and a high number of short-distance trips due to high hotel and air fares.

During the “May Day holiday” from May 1 to 5, the total number of domestic trips in mainland China was about 274 million, and the average daily number of domestic flights reached 112% of the 2019 level. By comparison, the proportion of international flights is still only 40%, analysts noted.

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